While on the oil production subject lets quickly discuss hedging. All hedges closed out in Mar (as I suspected). Net benefit to SSN of $250K. They receive that cash in Jun Qtr and is part of their Total Liquidity of approx $5.5M
April production appears not to be hedged. & Hedge value is $0.
Swaps for May & June would total 28,481 BO @ $41.20
Collars for May & June would total 12,289 BO with Put at $41.50 and Call at $63
Implies total oil hedged is 40,770 Bbls (for 2 months). SSN is required by MOB to hedge 75% of oil production. If I take 40,770 / 2 x 3 I get 61,155 and then divide that by 75% I would get as a "reasonable estimate of 3 months total production(?)" 81,540 Bbls of oil.
81, 540 Bbls of oil for the June Qtr. One could assume this is before any work over contribution as well.
Using that estimate if we subtract say +/- 40,000 BO for NS/R this would make oil production segmentation look something like
40,000 BO : NS/R
41,540 BO : FB existing
12,000 BO : FB workover
Total oil production (net to SSN) of 93,540 .... a great result. Also would then look for further (swap) hedges to be layered in (somewhere around additional 10,000 Bbls/mth
Just for grins were WTI oil to average $42 for the Qtr
Swaps = 28,481 x 41.20 = $1,175M (rounded)
Collars = 12,289 x $42 = $515K
Spot = 52,770 x 42 = $2,215M
Less Bakken discount ($8/Bbl) = 93,540 x ($8) = ($750)K
Oil Revenue = ~$3,155M ... (Buc has over $5M)
That result has avg realized oil price at $33.73/Bbl (a big jump from this Qtr at $25.18)
If you guys still remember the EBITDAX sensitivity table post for June Qtr, the high oil was 89,697 Bbls. If I bump that up to an even 100,000 BO and all else the same (critical piece now LOE at $1M for the Qtr - so that makes it $10/Bbl or even at $11/BO LOE) then EBITDAX on Sr debt remains below 4.5 (roughly 4.4x) with a Qtrly avg of $42.50
If all the above works out on production, LOE & Price of oil that nasty Debt/EBITDAX covenant can be covered. It's tight but it always was going to be and requires SSN to continually deliver on the Round 1 & Round 2 program in June and Sep Qtrs.
That "only" really leaves the $10M required to be raised to pay down the BB before June 30.
Winners are grinners so we'll see come mid June and mid Aug what gets announced. Only hope no surprises in the Mar 10Q which will be out in mid May.
SSN Price at posting:
0.5¢ Sentiment: None Disclosure: Held
